Following the Money

The ability to see how government uses the public purse is fundamental to democracy. Spending transparency checks corruption, bolsters public confidence in government, and promotes fiscal responsibility.

In the private sector, Internet search technology has revolutionized the accessibility and transparency of information. We take for granted the ability to track deliveries online, to check cell phone minutes and compare real estate on the Web, and even to summon – at the click of a mouse – satellite and street-level views of any address. But until recently, when it came to tracking government expenditures online, we were left in the dark.

State governments across the country are changing that. At least 32 states currently mandate that residents be able to access an online database of government expenditures with “checkbook-level” detail. Most of these Web sites are also searchable, making it easier for residents to obtain information about government spending.

This report evaluates states’ progress toward “Transparency 2.0” – a new standard of comprehensive, one-stop, one-click budget accountability and accessibility. At least 7 states have become leaders in the drive toward Transparency 2.0, launching easy-to-use, searchable Web sites with a wide range of spending transparency information. Twenty-five additional states have made initial steps toward online spending transparency by launching Web sites with checkbook-level detail on state spending that nonetheless have much room for improvement.

These Transparency 2.0 states are beginning to reap the benefits of transparency in greater government accountability and cost savings. The remaining states should join the ranks of Transparency 2.0 states by providing their budget information online in an accessible manner. All states should look to expand and improve their transparency Web sites to provide more and better information to citizens.

The movement toward Transparency 2.0 is broad, bipartisan, and popular.

• A nationwide wave – Legislation and executive orders in 32 states have given residents access to online databases of detailed government expenditures, and the federal government has launched similar initiatives. The vast majority of these states have acted over just the last three years.

• Bipartisan efforts – Transparency legislation has been championed by legislators both Republican and Democratic. In 2008, federal legislation to strengthen Web-based spending transparency was co-sponsored in the Senate by presidential rivals John McCain (R-AZ) and Barack Obama (D-IL).

• Public support – Republicans, independents and Democrats all support enhanced government transparency by wide margins. When asked about the role of transparency in the economic recovery package of early 2009, three-quarters of voters responding said that “creating a national Web site where citizens can see what companies and government agencies are getting the funds, for what purposes, and the number and quality of jobs being created or saved” would have an important impact on the package, with 39 percent believing its impact would be extremely important.

Transparency 2.0 saves money and bolsters citizen confidence.

• Increased civic engagement – Americans are eager to use transparency Web sites. Houston officials report improved public confidence after the launch of their transparency Web site. The Missouri Accountability Portal received more than 13 million hits in the 18 months after its launch.

• Low cost – Spending transparency Web sites can be inexpensive to create and maintain. The federal transparency Web site, which allows Americans to search through more than $2 trillion in yearly federal spending, cost less than $1 million to create. Missouri’s Web site, which allows visitors to search through more than $20 billion in annual state spending and is updated daily, was created with already-existing staff and appropriations.

• Big savings – Transparency Web sites can save millions through more efficient government operations, fewer manual information requests, more competitive contracting bids, and lower risk of fraud. In the two years following the launch of its transparency Web site, the Texas Comptroller reported $4.8 million in savings from more efficient government administration. Utah estimates millions in savings from reduced information requests. The largest savings may come from prevention of waste or abuse of public funds due to enhanced public scrutiny – savings that are impossible to quantify but likely significant.

• Better-targeted expenditures – Transparency budget portals allow states to track how well subsidies and tax incentives deliver results. Funds from underperforming projects and programs can be reinvested in more successful programs. By tracking the performance of state subsidies, Minnesota and Illinois have both been able to recapture money from numerous projects that failed to deliver promised results.

• Better coordination of government contracts – The Massachusetts’ State Purchasing Agent identifies four sources of savings for state procurement officers: sharing information with other public purchasers on good deals; avoiding wasteful duplication of bidding and contracting procedures through centralized processes; better enforcement of favorable pricing and contract terms; and focusing cost-cutting in areas where greater resources are spent.

• 32 states allow residents to access checkbook-level information about government expenditures online. Checkbook-level transparency allows viewing of individual government transactions. The majority of these states (29) also enable residents to search expenditures by vendor name or type of service purchased.

• Seven of these states are “leading states” in the transparency movement, hosting searchable Web sites that provide comprehensive information on a range of government expenditures, such as tax subsidies and economic development grants. These states are Kentucky, Ohio, Texas, Illinois, Minnesota, Missouri and Pennsylvania.

• Twenty-five states are “emerging states” with transparency Web sites that provide less comprehensive information and, in some cases, are not searchable by vendor or service.

• Eighteen other states are “lagging states,” whose online transparency efforts fail to meet the standards of Transparency 2.0.

• Four of these states have taken the positive step of creating spending transparency Web sites, but those sites either lack detail or access to comprehensive information on government spending.

• The remaining 14 states do not host government spending transparency Web sites.

Even in leading states, there are many opportunities to improve transparency Web sites.

• Most transparency Web sites do not provide enough detailed information on government contracts. Even some of the leading Web sites provide only a short description (two to three words) of the purpose of the contracts.

• Only 17 states include spending data prior to Fiscal Year 2009.

• Only eight states include data on tax expenditures, and only six describe the purpose or outcome of those expenditures.

• Only eight states provide information about local or county spending.

States should fill in budget reporting gaps and improve online transparency.

• Transparency Web sites should be a one-stop source for budget information. State governments should provide all financial information on one Web site, allowing citizens to easily view local spending, investments, or vendor payments.

• Transparency Web sites should provide comprehensive information. Transparency Web sites should be user-friendly portals that allow citizens to view detailed information on government contracts, tax expenditures, other subsidies and spending. For example, states should allow citizens to view the text of contracts, or at least detailed summaries that allow residents to understand the purpose, basic terms and outcome of the contracts.

• Transparency Web sites should be one-click searchable. Residents should be able to search data with a single query or browse common-sense categories. Web sites should also let residents sort data on government spending by recipient, amount, legislative district, granting agency, purpose, or keyword.